Understanding Meal and Entertainment Salary Packaging
Meal and entertainment salary packaging is a common fringe benefit offered by many Australian employers, particularly in the not-for-profit and public sectors. It allows you to pay for certain meal and entertainment expenses from your pre-tax salary, reducing your taxable income and potentially increasing your take-home pay. The ATO sets rules around what qualifies and any caps on the amount that can be packaged without incurring fringe benefits tax (FBT).
This benefit is separate from your base salary. When you compare your pay to the national full-time average, you are looking at your gross salary before any packaging. The national full-time average, as measured by the ABS Average Weekly Earnings for May 2026, stands at $2083.70 per week, or about $108,352 per year. This figure represents ordinary-time earnings for full-time adult employees and does not include fringe benefits or salary packaging.
How Salary Packaging Works
Under a salary packaging arrangement, you agree to forgo a portion of your pre-tax salary in exchange for a benefit of equal value. For meal and entertainment packaging, the benefit covers expenses such as restaurant meals, takeaway food, entertainment events, and holiday accommodation, subject to ATO guidelines. The packaged amount is deducted from your gross salary before tax is calculated, lowering your taxable income.
For example, if you earn $108,352 per year (the national average) and package $2,650 in meal and entertainment expenses, your taxable income reduces to $105,702. Depending on your tax bracket, this could save you hundreds or even thousands of dollars in tax and Medicare levy each year. The exact saving depends on your marginal tax rate—the highest rate that applies to your income.
Comparing to the National Average
The national full-time average is a useful benchmark for understanding where your gross salary sits. If your salary is equal to the average, you are earning exactly what the typical full-time worker earns before tax. However, if you also have meal and entertainment salary packaging, your effective income (the value of your salary plus the packaged benefits) is higher than the average suggests.
It is important to distinguish between the average and the median. The full-time median salary is about $90,532 per year (ABS Employee Earnings, August 2025), meaning half of full-time workers earn less than that. The all-employees median is about $74,100. The national minimum wage from 1 July 2026 is $26.44 per hour, or about $52,255 per year on a 38-hour week. Meal and entertainment packaging is most beneficial for workers in higher tax brackets, but even those on lower incomes can benefit if their employer offers it.
State and Territory Averages
If you are comparing your salary to the national average, it can also be helpful to look at your state or territory. The ABS provides full-time average earnings for each jurisdiction. For instance, the Australian Capital Territory has the highest average at about $119,090, while Tasmania has the lowest at about $96,008. Meal and entertainment packaging can help bridge the gap between your take-home pay and these averages, especially in higher-cost areas.
Place a salary on the line to see how your gross salary compares to the national average, week by week and hour by hour. You can also explore Guides for more information on salary packaging and other employment benefits.
Tax Implications
Salary packaging reduces your taxable income, which in turn affects the tax you pay. For the 2026–27 financial year, the tax rates are: nil on income up to $18,200; 15% on income from $18,201 to $45,000; 30% on income from $45,001 to $135,000; 37% on income from $135,001 to $190,000; and 45% on income above $190,000. The Medicare levy of 2% applies to most taxpayers, with reductions available for low-income earners.
By lowering your taxable income through packaging, you may reduce the amount of tax you pay at your marginal rate. For example, if your salary is $108,352 and you package $2,650, your taxable income drops to $105,702, which is still in the 30% bracket. You would save $795 in tax (30% of $2,650) plus the Medicare levy saving of $53 (2% of $2,650), for a total saving of $848 per year. If your salary is closer to the threshold of the 37% bracket, the savings are even greater.
Important Considerations
Not all employers offer meal and entertainment salary packaging, and there are limits on how much you can package without triggering FBT. The ATO sets a cap for certain types of employers, such as public hospitals and charities, but the exact amount can vary. You should check with your employer or a tax professional to understand the specific rules that apply to you.
Also note that salary packaging does not change your gross salary for the purposes of the national average. The ABS figures are based on gross earnings before any packaging. When you use the on-site tool to Place a salary on the line, you should enter your gross salary before packaging to see how it compares to the national average.
Conclusion
Meal and entertainment salary packaging is a valuable benefit that can increase your effective income, but it is not a salary figure itself. The national full-time average of $108,352 per year is a benchmark for gross earnings. By understanding how packaging works and how it interacts with tax, you can make informed decisions about your pay and benefits. For more details on how the figures are set, see How the figures are set.